Say your property is worth £100,000 and you have a mortgage of £75,000. On an 85% loan to value calculation, you ought to be looking for a mortgage of up to £85,000, use this to pay off your current mortgage and pay the balance of £10,000 into the IVA. Unfortunately, mortgages for people in IVAs are largely non-existent at present, and so this is where the additional year's contributions kicks in.
In my example, you would pay a further 12 months contributions, or a lower sum if you could pay the £10,000 earlier - for instance if your IVA payments were £1,500 per month. If your IVA payments are only £300 per month, then you only pay for 12 months ie £3,600 and not the full £10,000.
Hi Melanie, yes thats a big help.
Just making sure ive not read it wrong!
We are not at the end yet but we are finding it a bit sad to read posts by people who are getting into the equity release part and finding out that everything is not as it should be.
I just wonder if before people sign up to their agreements a impartial body could look over it just to make sure everything has been proposed fairly?
When your backs are against the wall, people do not always see things clearly and are desperate for help and will sign anything especially when they expect the person on the end of the line to be offering them help to get them out of trouble.
Many many thanks again Melanie, just wish a lot more IP's worked the way you do.
I agree with Baldy. the equity release clause is something that should be made very clear and some document signed in the presence of a third party
The amount of people who have posted about this subject over the years is a clear indication that many times it has just been glossed over
People in debt are very vulnerable in particular to signing just about anything to make the debt and relentless calls go away
There is a stringent set of rules baldy - it is called "the terms of the IVA", and IPs cannot change those terms to suit themselves. Anyone concerned about how the equity in their property is being dealt with, should raise an internal complaint in the first instance, and if still not satisfied then take this to the IPs regulatory body.
Hi guys i have just supplied my property valuation, and mortgage statement to my ip, can you please confirm if my workings out are correct. House value £103000 - Out standing Mortgage £82613, ltv @85% is £87550 leaving equity @ £4937?
So will i have to extend by a further year. My IP contacted me to say that i will go into a further year as i have £20.000 equity?
Any help would be appreciated
Hi. On those figures, assuming the usual protocol terms, you should not have to extend.
Check your proposal -- does it state 85% LTV ? And does it include the £5k deminimis ?
It looks like whoever you spoke to is working on 100% LTV, which means either your proposal has one of the rarer 100% LTV clauses, or that he / she hasn't quite understood the clause, if it an 85% one.
Check the paperwork and challenge your IP if needed.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Thanks for the reply foggy, i did question it today, but the person i spoke to says that i have to extend, but in my paper work says
Re-mortgages would be to a maximum of 85% ltv
If the amount of equity available in the homes at month 54 is under £5000, it does not have to be released, and there would be no adjustment to the iva term.
I did question this and read out the above text and was told they are working from a house value of £103000 @ 100%
She just told me to make a complaint, then they will review.
Up until now i have never had a cause for concern but since my last review where expenditure is -£45 pm as price rises, NI contributions etc, they would not lower, just reduced contingency amount and fuel allowance down.
My iVA company is McCambridge Duffy.
In what way do you mean that, they dont do protocol compliant ivs's?
If its writtern on your proposal this is a legal document have they should then comply to that clause.
